On May 8, facing public concern, China Railway Construction Corp offered an explanation of its entertainment expenses in its annual report.

The expenses amounted to 837 million yuan ($136.18 million).

The corp also claimed to have reduced 10 percent of its business entertainment expense this year.

Such expenses, and the mindset behind them, will have an impact on the economy, says an article in Beijing News (excerpts below).

The CRCC explained that that entertainment costs only accounted for 0.17 percent of its total revenue, and was generated by all branch offices in over 60 countries and regions worldwide.

But the costs actually accounted for 9.8 percent of the company's net profit, if we check its earnings report carefully.

Moreover, as 90 percent of the company's business is coming from its domestic market, we can estimate the entertainment expense spent in the domestic market was even higher than 750 million yuan in 2012.

This problem of lavish entertainment costs is shared with other State-owned companies.

There is legitimate public concern at such high costs. Apart from an evening's entertainment, what is the real price being paid. Sub-standard work?

If a loophole in the law allows such extravagant behavior, then it should be closed.